Sunlit Prehistoric People... Highest Container Freight Index Since Tracking Began

SCFI Index at 1664.56... Highest Level Since Inception

[Asia Economy Reporter Yu Je-hoon] The container ship freight index has recorded the highest level since its inception. It is also expected that the profitability of domestic shipping companies such as HMM will improve at a faster pace.

According to the shipping industry on the 7th, the Shanghai Containerized Freight Index (SCFI), which serves as an indicator of container ship freight rates, recorded 1664.56 as of the 6th. This is an increase of 134.57 compared to the previous week and is the highest since the related statistics began in October 2009. The previous highest was 1583.18, recorded in July 2010.

The freight rate increase was also clear by route. On the US-East Asia route, where freight rates have soared due to recent cargo volume expansion, the rate rose by 22 dollars to 3,871 dollars per FEU (a unit referring to one 12m container), and on the US-West Coast route, it rose by 24 dollars to 4,665 dollars. Freight rates on other important routes such as Europe and the Mediterranean also rose significantly.

This freight rate increase is interpreted as a result of countries around the world not loosening the reins on economic reopening despite the second wave of the novel coronavirus infection (COVID-19). Especially in the fourth quarter, major events such as Black Friday and Christmas, which boost cargo volume, are lined up.

Another main reason is that the international shipping industry, which underwent repeated mergers and acquisitions in the 2010s, has reached a kind of "equilibrium state." An industry insider said, "Instead of the chicken game-style supply competition that global shipping companies engaged in during the 2010s, they naturally adjusted supply during this COVID-19 phase."

There is also interest in whether this freight rate trend will lead to improved performance for domestic shipping companies. HMM posted an operating profit of 138.7 billion won in the second quarter, marking a profit for the first time in 21 quarters. The securities industry estimates that HMM posted about 350 billion won in operating profit in the third quarter.

This content was produced with the assistance of AI translation services.